Legal Question in Insurance Law in Kansas

Inequitable coverage after age 65

At age 66, I am still employed full time in a job I like and have been doing ten years. A recent discovery in company policy gives me cause to question whether my concern is actionable. The company provides life insurance to a maximum of one years' salary free to all employees nationally. I have no plans to cash in on it, but discovered that each year after 65 the coverage decreases by ten percent per year. When I questioned the Human Relations office, the response was that this is standard practice in the insurance industry. My response to that is ''So was red lining in predominantly black housing areas until that was declared illegal'' Is ageism involved, and what is our recourse?


Asked on 1/08/01, 10:05 am

1 Answer from Attorneys
Charles Aspinwall Charles S. Aspinwall, J.D., LLC

Re: Inequitable coverage after age 65

It is not in fact "standard" in the industry, but it is not unheard of, either. It is called "declining term" insurance, and is much cheaper for the company than "level term" or whole life, for obvious reasons - they have to pay less for the death of older employees.

The insurance industry is entirely controlled by statistical [actuarial] considerations. Older people are obviously at greater risk for death than younger people. Thus, premiums for life [death]insurance are generally higher the older one gets -read- the closer one gets to the end.

While your company has chosen the cheaper route in providing declining-term coverage to older employees, and indeed it is age-discrimination, ALL of insurance discriminates on the basis of age and that is the industry standard.

I do not think you have a claim for the kind of age-discrimination in the workplace that the law recognizes in this instance.

There could certainly be contrary opinions, however, so you may wish to seek another.

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Answered on 1/11/01, 10:53 am


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